CBRE (CBG) Tops Q4 Earnings; Solid Growth in Asia Pacific
Real estate services firm, CBRE Group Inc. CBG reported fourth-quarter 2016 adjusted earnings per share of 93 cents, beating the Zacks Consensus Estimate of 79 cents. The figure also denoted a 14.8% increase from the prior-year quarter tally of 81 cents.
On a GAAP basis, earnings per share came in at 78 cents, significantly ahead of the prior-year quarter earnings per share of 53 cents.
CBRE Group posted revenues of $3.82 billion, which were higher than the year-ago figure of $3.7 billion. However, the figure lagged the Zacks Consensus Estimate of $3.89 billion.
Fee revenues were up 4% (6% in local currency) year over year to $2.7 billion. Further, excluding contributions from all acquisitions, organic fee revenue advanced 3% (5% in local currency).
For full-year 2016, CBRE reported earnings per share of $1.69, reflecting around 3.7% growth from the prior year. Adjusted earnings per share of $2.30 denoted an increase of 12.2% from a year ago. Revenues climbed 20.4% year over year to $13.1 billion.
Revenues Details
Revenues from the Americas increased 6% (6% in local currency) year over year to $2.1 billion during the quarter; while that from the Asia-Pacific region climbed 22% (19% in local currency) to $462.8 million with solid growth throughout the region. In fact, Asia Pacific emerged as the company’s fastest growing region for the quarter.
However, revenues from the EMEA region declined 3% (increased 6% in local currency) year over year to nearly $1.2 billion. Results marked adverse impact from foreign currency movement and mainly the depreciation of the British pound sterling. Nevertheless, despite the Brexit fallout, the UK market saw revenue growth of 8% in local currency, driven by the occupier outsourcing business line.
In the Global Investment Management segment, revenues totaled $91.9 million, down 35% (33% in local currency) year over year; while the Development Services segment reported revenues of $20.3 million, unchanged year over year. Notably, in the fourth quarter, the company signed 110 outsourcing contracts and there were robust gains in the health care sector.
Liquidity
CBRE exited the year 2016 with cash and cash equivalents of $762.6 million, up from $540.4 million as of Dec 31, 2015.
2017 Outlook
CBRE Group projects adjusted earnings per share for 2017 in the range of $2.35–$2.45. This is above the Zacks Consensus Estimate of $2.30.
Notably, the company anticipates growth to be hindered by a 6 cents per share impact from adverse foreign currency movement.
Our Viewpoint
Moving ahead, we believe that the company would benefit from strategic in-fill acquisitions, transformational deals, and improvement in leasing, property sales and outsourcing business. However, uncertainties in certain global economies, stiff competition and unfavorable foreign currency movements remain concerns.
CBRE Group currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CBRE Group, Inc. Price, Consensus and EPS Surprise
CBRE Group, Inc. Price, Consensus and EPS Surprise | CBRE Group, Inc. Quote
Better-ranked stocks in the real estate space include The RMR Group Inc. RMR, Henderson Land Development Company Ltd. HLDCY and RE/MAX Holdings, Inc. RMAX. While The RMR Group sports a Zacks Rank #1 (Strong Buy), Henderson Land Development and RE/MAX carry a Zacks Rank #2 (Buy).
For RMR Group, estimates for the fiscal year ending on Sep 30, 2017 climbed north over the past seven days. Further, both Henderson Land Development and RE/MAX have a long-term expected earnings growth rate of 8.50%.
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